Exam 1

A situation in which an economic gain by one country results in an economic loss by another is called a

zero-sum game.

TimeForce, a U.S.-based company, is planning to expand operations to a foreign country. Considering the factors that make a country attractive as a place in which to do business, which country should TimeForce consider for entry?

Country D, which has democratic institutions and a market-based economic system.

Which of these companies exemplifies the globalization of markets?

Fluffy Pillows, a U.S.-based pillow company, sells the same pillows worldwide.

According to globalization supporters, what is an advantage of globalization?

Globalization helps create jobs in all countries that participate in the global trading system.

According to globalization opponents, what is a disadvantage of globalization?

Globalization results in companies "exporting jobs" to low-wage nations.

When Mark Zuckerberg co-founded Facebook, he was acting as a(n) ________ since he was the first to commercialize this innovative new product.

entrepreneur

Shayla is from South Africa and believes that the customs and beliefs of her culture are superior to those she has encountered during her trip to America. Shayla's attitude is an example of

ethnocentrism.

In the Republic of Nabu, natives are resistant to change and do not like to take risks. They value job security and retirement benefits. In addition, they have a strong need for rules and regulations. Based on this information, the Republic of Nabu demonstrates which cultural dimension identified by Hofstede?

high uncertainty avoidance

The base for the adjustment of purchasing power parity is the cost of living in

the United States.

A form of government in which political power is monopolized by a party, group, or individual that governs according to religious principles is called what type of totalitarianism?

theocratic

Saturn Systems Inc., which is headquartered in the United States, has its production plant located in a less-developed country where working conditions are poor. For example, employees work 15-hour shifts, are exposed to toxic chemicals, and are forced to work overtime. What type of behavior is Saturn Systems Inc. exhibiting?

unethical

Which country has seen their share of world output increase the most from 1960 to today?

China

Intelligent Tool Corp. is planning to set up a production plant abroad. It has selected five potential countries based on their population size, stage of economic development, labor costs, and access to world markets. Considering the connection between culture and competitive advantage, which of the following countries would be the best investment site for Intelligent Tool Corp.?

Country B, where education is well-developed and social stratification is lacking.

What organization is often seen as the lender of last resort to nation-states whose economies are in turmoil and currencies are losing value against those of other nations?

International Monetary Fund (IMF)

What occurs according to Moore's law?

The power of microprocessor technology doubles and its cost of production falls in half every 18 months.

Which institution was established as a result of the Uruguay Round of GATT?

World Trade Organization

People in the West tend to associate a representative democracy with

a market economic system.

John, an American executive, learns that a foreign subsidiary hired a 12-year-old orphan girl to work on the factory floor. He knows that using child labor is in direct violation of the company's own ethical code. At the same time, he does not think that denying the child her only source of income is right. John is facing

an ethical dilemma.

Jerome knew it was wrong for his company to continue ignoring environmental standards set down by the state. Jerome is able to determine this based on

business ethics.

As a judge in France, Maurice is not allowed to interpret the law but relies on a strict set of codes to determine the outcome of a case. Which type of law is in place in France?

civil law system

An individual's right to do something may be restricted on the grounds that it runs counter to "the good of society" when the political system emphasizes

collectivism.

A ________ economy follows the principles of collectivism as resources are allocated based on "the common good."

command

In the country of Doran, all businesses are owned by the state. The government plans production, fixes commodity prices, and also directs investments to ensure they benefit the nation as a whole and not only a few individuals. What type of economy has the country of Doran adopted?

command

According to Porter, which factor endowment would be classified as an advanced factor?

communication infrastructure

Which term indicates that the units of resources required to produce a good are assumed to remain fixed no matter where one is on a country's production possibility frontier?

constant returns to specialization

What political system has a government that is by the people, exercised either directly or through elected representatives?

democracy

A country that abolishes laws that regulate private enterprises and removes price controls is in the process of

deregulation.

The main reason that gross national income figures can be misleading is because they

don't consider differences in the cost of living.

Which of the following BEST increases a country's competitive advantage and its attractiveness as a location for international business?

education system that is well developed

The economic and strategic advantages that accrue to early entrants into an industry are called

first-mover advantages.

MaryAnne is always late to meetings and she knows she needs to be better about being on time because it is expected by almost everyone living in the United States. This attitude toward time is an example of a

folkway.

One cost-cutting measure used by Garr Tool Corp. is sourcing the parts it uses from companies in Germany, Ireland, and Canada that are more economical than home-country sources. The choice to use these sources is an example of the

globalization of production.

Within the context of the individual as the basic unit of a social organization, what is an implication of the emphasis on individualism in many Western societies?

high degree of managerial mobility between companies

Technology is indicated as having a major impact on the declining share of national income enjoyed by labor. If this is the case, what is a logical solution to this problem?

increasing society's investment in education

Daria owns 100 shares of stock in Dow Corning. She would be considered a(n)

internal stakeholder.

U.S.-based Centra Corporation is hesitant about entering into a licensing agreement with Fission, Inc., a company from another nation, due to the likelihood that Fission will break a contract or expropriate property rights. What specific type of risk is Centra Corporation trying to avoid?

legal

According to Geert Hofstede, what dimension captures attitudes toward time, persistence, ordering by status, protection of face, respect for tradition, and reciprocation of gifts and favors?

long-term versus short-term orientation

The government of the Republic of Senna enforces tariffs and quotas to limit imported goods, while exports are subsidized. By using these instruments, the government seeks to achieve a surplus in the balance of trade. Based on this information, which approach most influences the Republic of Senna's approach to international trade?

mercantilism

Which approach suggests that nations may benefit from trade even when they do not differ in resource endowments or technology?

new trade theory

The social rules and guidelines that prescribe appropriate behavior in particular situations are called

norms.

HealthWise Corporation has developed a new diet supplement to assist with weight loss. Which type of legal protection grants HealthWise Corporation exclusive rights for a defined period to the manufacture, use, or sale of this new diet supplement?

patent

ABC Company is hesitant about entering Ukraine, because the country has been experiencing social unrest in recent years. Based on this information, what type of risk is ABC Company trying to avoid?

political

Jason runs a manufacturing company. He hires five people based on their physical abilities because they are able to lift heavy boxes in the stockroom and two people based who are able to strategically plan the company's next steps. Jason realizes that people are not equal in physical and intellectual capabilities, an aspect of which cultural dimension identified by Hofstede?

power distance

One root cause of unethical behavior in business is

pressure to meet unrealistic performance goals.

In 2017, the Brazilian government transferred the state ownership of the electric company, the airports, highways, and ports to private investors to stimulate the economy. This is an example of

privatization.

Marietta told the management team that the company would have to find a new way to produce the vitamin because the Food and Drug Administration had recently banned "nofon," the key ingredient in their product. The standard set by the FDA is a type of

product safety law.

Julie asked her assistant to determine the gross national income of three different countries by evaluating the GNI against the cost of living in the United States. What measure is Julie asking her assistant to use?

purchasing power parity

The social strata evident in a society is primarily derived from

socioeconomic characteristics.

Strategies that not only help the multinational firm make good profits, but that do so without harming the environment while simultaneously ensuring that the corporation acts in a socially responsible manner with regard to its stakeholders are called

sustainable strategies

During the second stage of the ethical decision-making process, managers must determine whether a proposed decision would violate

the fundamental rights of any stakeholders.

Krisp Systems decides to move production to a developing country where they are free to pump pollutants into the atmosphere without legal restriction. By doing this, the company is contributing to

the global tragedy of the commons.

The basic position of the Friedman doctrine says that

the only social responsibility of business is to increase profits, so long as the company stays within the rules of law.

The Heckscher-Ohlin theory is based on the idea tha

the pattern of international trade is determined by differences in factor endowments.

A country that has ________ lowers the risk of doing business in that country.

the presence of a strong legal system

The Republic of Monaslu has the world's most efficient car manufacturing industry, while the country of Ingora has the world's most efficient electronics industry. The Republic of Monaslu trades cars with Ingora in exchange for consumer electronics. This form of trade between the two countries illustrates

the theory of absolute advantage.

The basic message of ________ is that potential world production is greater with unrestricted free trade than it is with restricted trade.

theory of comparative advantage

The ________ approach to ethics holds that the moral worth of actions or practices is determined by their consequences and is committed to the maximization of good and the minimization of harm.

utilitarian

AllSpice Incorporated plans to do business with a company located in the Leone Republic, a common law country. The companies have agreed to draft the business contract in the Leone Republic. Since the contract will be drafted under a common law framework, what best characterizes the contract?

very detailed with all contingencies spelled out

According to the product life-cycle theory, once a new product becomes widely accepted internationally then production for that product

will start to take place in other countries.